Understanding Car Leasing: A Comprehensive Guide to How It Works

Car Leasing

What is car leasing and how does it work?

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Leasing is an often misunderstood car financing option so, in response to subscriber feedback, we've included this article to help give you a better understanding of what it is and how it works.

What's leasing all about?

Leasing is really just another form of borrowing to finance a car.

But unlike loan finance - where you take ownership of the car and offer it or something else as security to the lender – lease finance sees a leasing company take ownership and give you the use of the car under contract for a specified period.

Lease contracts

Upon signing your lease contract you agree to make regular monthly lease payments, keep appropriate insurance, pay any vehicle taxes or fees, and take good care of the vehicle.

Car Loans - Quick & Easy

If you are in the market for a new or used car, then we'd like to help you arrange the money. Our car loan & leasing service is backed by a national panel of car loan specialists who will establish your eligibility, find lender/s offering the best deals for your situation - and help you through the approval and settlement process. No charge to you - and no obligation to proceed with any recommendations offered.

... start your car loan here ...

Further, you agree that you'll keep the car for a specified period - typically two to five years - and you're expected to stick it out to the end of the lease contract.

At the end of the lease period, there is often an option to purchase your vehicle at a specified price.

Or you may be able to use the car as a trade-in on a new car.

Otherwise, the leasing company will expect the vehicle to be returned with no more than normal wear and tear.

You may have to pay them for any damage or extra mileage over and above a contract-specified limit.

Lease or buy?

Leasing may involve lower monthly payments than a car loan but this is often because you are only paying off a portion of the vehicle’s value, leaving a 'residual' amount at end of the lease period.

And at lease end, you will not own the car.

Leasing is often promoted as a cheaper way to finance a car because of the tax advantages it can bring for the self-employed or those who take out a novated lease through their employer.

This is not necessarily the case and really depends on how much mileage will be clocked up overall, what proportion is for work purposes, and what tax rate you are on.

Published: Sunday, 1st Aug 2021
Author: Paige Estritori

Truck Loans Articles

The Ins and Outs of Commercial Truck Loans: A Buyer's Guide in Australia

Commercial trucks serve as the lifeblood of the Australian economy, providing vital links between industries and markets across the vast landscapes. The importance of these heavy-duty vehicles cannot be overstated, as they are pivotal in ensuring the smooth operation of both urban and rural businesses alike. Engaging in the commercial truck market is a significant investment, and understanding the ins and outs of financing such a purchase is crucial for business success. - read more

Understanding Credit Scores and Their Impact on Your Commercial Vehicle Loan Terms

Finding the right financing for a commercial vehicle in Australia can be a critical step for businesses and individuals alike. Whether it's for a single van or an entire fleet of trucks, understanding the intricacies of commercial vehicle loans is key to securing a deal that aligns with your financial goals. One factor that stands out in determining your loan terms is the credit score—a numerical representation of your creditworthiness. - read more

How to maintain your truck to extend its lifespan in Australian conditions

Maintaining your truck is essential if you want to prolong its lifespan and save money down the road. Australian conditions can put a lot of strain on your vehicle, and neglecting its maintenance can lead to costly breakdowns and repairs. - read more

Understanding Your Options: A Guide to Commercial Vehicle Loans in Australia

If you're running a business in Australia, choosing the right commercial vehicle loan can be pivotal to your success. Whether you're a small business owner needing a delivery van or a large company expanding your fleet, understanding your financing options is crucial. - read more

The Pros and Cons of Leasing vs. Buying a Truck for Your Business

Small businesses that require regular transportation of goods may find it essential to purchase a truck. However, this acquisition can become a significant investment that requires careful consideration before making a decision. The two options available are buying or leasing a truck. In this article, we will explore the pros and cons of each option to help you make an informed choice. - read more

Finance News